Subodh Sikshan Sanstha Adyal Vs CIT (Exemption) (ITAT Nagpur)
Summary: The ITAT Nagpur considered the assessee’s appeal against the Commissioner of Income Tax (Exemption)’s order dated 30 September 2025 rejecting its application for regular approval under Section 12A(1)(ac)(ii) of the Income-tax Act. The rejection arose from an error in mentioning the statutory provision under which registration was sought and delay in filing the application. At the outset, the Tribunal condoned the separate one-day delay in filing the appeal. On the substantive dispute, it held that quasi-judicial authorities should decide applications on merits and that merely referring to an incorrect statutory provision cannot justify dismissal of an application seeking statutory relief.
The Tribunal observed that requirements governing applications for provisional or permanent registration under Section 12AB and approval under Section 80G are procedural. Subject to any statutory prohibition against rectification or condonation, mistakes, filing delays and ordinary procedural irregularities should receive liberal consideration. The prescribed authority should give applicants an opportunity to correct errors or explain the delay. In support, the Tribunal referred to the Mumbai Bench decisions in Rashtra Tej Manch, Mohanji Bharat Welfare Foundation and Anybody Can Help Foundation. It also noted the legislative provision empowering the prescribed authority to condone delayed registration applications where reasonable cause exists.
On substantial compliance, the Tribunal relied on Commissioner of Customs (Import), Mumbai Vs Dilip Kumar & Co. and CIT Vs Gujarat Oil & Allied Industries. The reproduced Supreme Court passage distinguishes minor procedural shortcomings from failure to satisfy an essential statutory prerequisite. The Gujarat High Court decision concerned the procedural and directory nature of furnishing an auditor’s report with the return, recognising substantial compliance where the report was available when the assessment and deduction claim were considered.
The Departmental Representative submitted that the assessee could file a fresh application. The Tribunal nevertheless held that, where natural justice had not been followed and rejection rested merely on technical grounds, the assessee should receive an opportunity to rectify the existing application instead of being left to apply afresh and seek condonation. Accordingly, it restored the matter to the prescribed authority to permit a rectified application and thereafter decide the application on merits. The appeal was allowed for statistical purposes; registration was not granted outright.
Cases Discussed
- Rashtra Tej Manch Vs CIT(E), Mumbai — ITA No. 6957/Mum/2025, dated 11 March 2026 (ITAT Mumbai) — Relied upon in support of liberal consideration of procedural lapses in registration or approval applications.
- Anybody Can Help Foundation Vs ITO (Exemption) — ITA No. 7245/MUM/2025, dated 6 January 2026 (ITAT Mumbai) — Cited among the coordinate Bench decisions supporting relief against technical rejection of registration or approval applications.
- Mohanji Bharat Welfare Foundation Vs CIT(E), Mumbai — ITA No. 2617/MUM/2025, dated 14 October 2025 (ITAT Mumbai) — Relied upon regarding liberal consideration of procedural requirements governing registration or approval.
- Commissioner of Customs (Import), Mumbai Vs M/s. Dilip Kumar & Co. — AIR 2018 SC 3606 (Supreme Court) — Relied upon for the doctrine of substantial compliance, subject to compliance with essential statutory prerequisites.
- CIT Vs Gujarat Oil & Allied Industries — (1993) 201 ITR 325 (Gujarat High Court) — Relied upon for treating furnishing of an auditor’s report with the return as procedural and directory, with substantial compliance sufficient in the circumstances discussed.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
This appeal filed by the assessee is directed against the order of Ld. Commissioner of Income Tax (Exemption) (for short, “CIT(E)”), dated 30/09/2025 whereby application for regular approval under Section 12A(1)(ac)(ii) of the Act has been rejected.
2. At the outset, we observe that there is a delay of one day in filing the appeal and considering the same that the delay is not of substantial period, the delay is condoned.
3. On hearing both the sides, we find that the impugned order has been passed by Ld. Prescribed Authority observing that there was error in mentioning the provision of law under which the application was filed seeking registration under Section 12A(1)(ac) of the Act and further there was a delay in filing the application.
4. We are of the considered view that quasi–judicial authorities are supposed to decide the issues on merits and merely reference to a wrong provision in an application seeking relief under statute cannot be basis to dismiss an application.
5. We are of considered view that the provisions requiring filing of applications seeking provisional or permanent registration under Section 12AB or approval u/s 80G of the Act are procedural part of the Act and unless there is statutory bar that the mistake cannot be rectified, the delay cannot be condoned, any mistake or delay in filing of the application or any other irregularity which can arise out of ordinary course of business, should be considered to be technical non–compliance and as quasi–judicial authorities, Ld. Prescribed Authorities should exercise discretion calling upon applicant to correct the mistakes or to explain the reasons for delay. Such provisions require liberal interpretation being technical in nature and reliance in this regard can be placed on the decision of Mumbai Benches in following cases;–
> Rashtra Tej Manch v. CIT(E), Mumbai in ITA No. 6957/Mum/2025 dated 11/03/2026
> Mohanji Bharat Welfare Foundation v. CIT(E), Mumbai in ITA No. 2617/MUM/2025 dated 14/10/2025
> Anybody Can Help Foundation vs. ITO (Exemption) in ITA No. 7245/MUM/2025 dated 06/01/2026
6. In fact the law as now stands after Finance (No.2) Bill, 2024, powers have been given to Ld. Prescribed Authority to condone the delay in filing applications under Sections 12AB and treat such applications as timely filed, provided there is a reasonable cause for the delay.
7. In this context, we also rely decision of Hon’ble Supreme Court in Commissioner of Customs (Import) Mumbai vs. M/s. Dilip Kumar & Co. AIR 2018 SC 3606 wherein doctrine of substantial compliance has been recognized by Hon’ble Supreme Court and we are of considered view that in situations like the present, the assessee deserves to be given the benefit of the principle as laid down. As for convenient reference, the relevant part of the said decision is reproduced below;–
“32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the “essence” or the “substance” of the requirements. Like the concept of “reasonableness”, the acceptance or otherwise of a plea of “substantial compliance” depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleased if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means “actual compliance in respect to the substance essential to every reasonable objective of the statute” and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed”.
8. We find that the principle of substantial compliance of procedural provisions has been recognized by Hon’ble Gujarat High Court in case of CIT vs. Gujarat Oil & Allied Industries reported in 201 ITR 325 and the relevant extract of the judgment is reproduced as under:–
“In our view, the aforesaid reasoning of the Allahabad High Court and the Patna High Court would squarely apply to the facts of the present case. The provision about furnishing of the auditors’ report along with the return has to be treated as a procedural provision, directory in nature, and its substantial compliance should suffice, meaning thereby that such report should be made available by the assessee to the Assessing Officer latest when the question of framing of assessment is taken up by the Income-tax Officer and when he applies his mind to the claim of the assessee and if by that time, the assessee has put his house in order and has furnished the report of the auditor for supporting the return, he can be said to have satisfied the requirement of section 80J(6A) of the Act.”
9. Though Ld. DR submits that the assessee can file application afresh, however, we are of the considered view that when Principles of Natural Justice are not followed and the rejection of an application is merely for technical reasons, assessee should be given opportunity to rectify the mistake instead to leave for a remedy of filing an application afresh and seeking condonation thereby.
10. In the light of aforesaid, appeal is allowed and the issues on merits are restored to the files of Ld. Prescribed Authority for giving an opportunity to the assessee to file rectified application and thereafter decide the application on merits.
11. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 18.06.2026
